What Will Happen To Bank Executives’ Tenure Effective August 1, 2023 – CBN

What Will Happen To Bank Executives’ Tenure Effective August 1, 2023 – CBN

Effective August 1, 2023, bank executives in Nigeria will be limited to a maximum tenure of 24 years in office, according to the Central Bank of Nigeria (CBN). The regulation applies to Executive Directors, Deputy Managing Directors (DMD), and Managing Directors (MDs) of banks and bank holding companies.

The new regulation, signed by Chibuzo Efobi, Director of the Financial Policy and Regulation department of the CBN, is in line with the powers conferred by the CBN Act 2007 and the Banks and Other Financial Institutions Act 2020.

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The circular, titled “Corporate Governance Guidelines for Commercial, Merchant, Non-Interest, and Payment Services Banks in Nigeria; and the Corporate Governance Guidelines for Financial Holding Companies in Nigeria,” incorporates relevant principles and recommended practices from the Nigerian Code of Corporate Governance and global corporate governance practices.

The guidelines highlight the responsibilities of boards and Executive Compliance Officers and supersede previous codes, circulars, and directives on corporate governance issued by the CBN.

According to Section 8 of the Guidelines, the cumulative tenure limit for directors on the Board of the same bank is 24 years. Additionally, executive directors who complete their maximum tenure must serve a cooling-off period of two years before being eligible for appointment as non-executive directors in the same bank, subject to applicable tenure limits.

Independent non-executive directors can serve a maximum of eight years, not exceeding two terms of four years each. Non-Executive Directors, except Independent Non-Executive Directors, can serve for a maximum of 12 years, comprising three terms of four years each.

The guidelines also specify that at least one Non-Executive Director in a commercial bank with an Islamic banking window should have knowledge or experience in the field of Islamic finance or Islamic Commercial Jurisprudence.

These new regulations aim to enhance corporate governance in the banking sector and ensure a more effective oversight framework.